1. Completely original; made or thought up as a whole; entire, seamless.2. False, fictitious, without foundation.

Examples:

[Sense 1] Einstein's theory of relativity was made out of whole cloth; it was a completely new way of thinking about the universe.

[Sense 2] The story is a complete invention; the newspaper made it up out of whole cloth.

This is an idiom I am seeing more and more. It appears that sense 1 was the original one, often used with approval (an item literally made from a single piece of cloth, rather than a patchwork, used to be a luxury). In 19th-century America, however, it began to be used in sense 2, perhaps on the basis that a complete lie is entirely "original" and contains no "patches" of truth.

An alternative explanation given for the latter sense is that tailors often used to claim falsely that an item was made from a single cloth and hence more valuable. The phrase "out of whole cloth" therefore came to be used in implied quotes, denoting a mendacious claim of wholeness. If this is indeed how the usage originated, the sense seems to have become oddly transferred from that of "sham wholeness" to simply "sham".

The second sense, in which I normally see it used, still seems to be largely American. Is its use really becoming more frequent?

I believe I've heard it all my life. It's mostly applied to politicians and gossips, some of whom have made it into an Olympic sport. All sorts of rumors circulate in emails, mostly pollitical screeds and from both Republicans and Democrats, that have little or no basis in fact. They are indeed made up of whole cloth!

" The OED also gives several citations for the phrase "cut (ormade) out of whole cloth". The earliest citation is from 1579.These citations indicate that for roughly 300 years, the phrase was used to connote entirety, but not falsehood (an example from 1634:"The valiant Souldier ... measureth out of the whole cloath hisHonour with his sword". This positive sense of "whole cloth" persisted in England until at least the beginning of this century (a citation from 1905: "That Eton captain is cut out of whole cloth; no shoddy there".) " -- Ellen Rosen, date unknown at http://alt-usage-english.org/excerpts/fxwholec.html

"whole cloth, or broadcloth, is material of the full size as originally manufactured -- not the end bit or remnant or piece cut out of the whole for reuse in a quilt or smaller-size garment. Like a sense of the whole person -- well balanced, ''together'' -- whole cloth has integrity, akin to ''all wool and a yard wide.'' Then, early in the 19th century, the phrase's meaning flipped. In 1840, the Canadian novelist Thomas Haliburton, in his dialect-rich ''The Clockmaker,'' had his Yankee character named Sam Slick say: ''All that talk about her timper was made out of whole cloth, and got up a-purpose. . . . What a fib! . . . It's all made out of whole cloth.''" -- William Safire July 19, 1998